Day: 1 June 2022

It’s a good day for the Telstra Corporation Ltd (ASX: TLS) share price despite criticism of its proposed deal with TPG Telecom Ltd (ASX: TPG).

Competitor Optus has reportedly slammed the agreement that, if approved by regulators, will see Telstra and TPG sharing mobile infrastructure networks.

At the time of writing, the Telstra share price is $3.99, 2.84% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.02%.

Let’s take a closer look at what might be going on with the telco giant’s stock.

What’s going on with the Telstra share price?

The Telstra share price is trading at its highest point in four weeks on Wednesday.

Meanwhile, the S&P/ASX 200 Communication Index (ASX: XTJ) is the ASX 200’s best performing sector, gaining 1.7%.

Leading the sector is the TPG share price’s 3.04% gain. Telstra’s gain makes it today’s second best performing ASX 200 communications stock.

The companies’ gains come amid news that Optus CEO Kelly Bayer Rosmarin has criticised a deal signed between the ASX-listed telcos.

The deal will bring “higher prices, worse service, and less resilient communities”, Bayer Rosmarin was quoted by The Sydney Morning Herald as saying.

The comments come as the Australian Competition and Consumer Commission (ACCC) considers a merger application from Telstra and TPG, made public yesterday.

The deal will see TPG able to access around 3,700 Telstra mobile network assets. Meanwhile, Telstra will get access to TPG’s spectrum across 4G and 5G. It’s expected to bring Telstra revenue of between $1.6 billion and $1.8 billion over an initial 10-year term.

A Telstra spokesperson was also quoted by the publication as saying:

While new to the Australian market, active network sharing is common in Europe and North America.

Some of the criticism of the Telstra-TPG deal has come from competitors who either cannot think beyond the infrastructure sharing models of the past or who were not bold enough to get there first.

Today’s gains included, the Telstra share price has slipped 5% since the start of 2022. Though, it’s nearly 15% higher than it was this time last year.

The post Why is the Telstra share price dialling higher today? appeared first on The Motley Fool Australia.

More reading

• Why did the Telstra share price backtrack in May?
• Analysts name 2 ASX 200 dividend shares to buy now
• These 3 shares are topping the ASX 200 volume charts on Wednesday
• Is Telstra an ASX 200 share worth owning right now?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX nickel shares are struggling on the market today.

Nickel explorers in the red today include Nickel Mines Ltd (ASX: NIC), Mincor Resources NL (ASX: MCR), Panoramic Resources Ltd (ASX: PAN), and IGO Ltd (ASX: IGO). By comparison, the S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.91% at the time of writing.

Let’s take a look at why nickel shares are having such a tough day on Wednesday.

Nickel outlook

The IGO share price is down 13% at the time of writing with Nickel Mines 4.12% lower. Meanwhile, Mincor Resources is down 4.69% while Panoramic Resources is 6.78% in the red.

ASX nickel shares appear to be falling in response to nickel price pressure and a note out of Goldman Sachs.

The nickel price has fallen 3% today to $28,343 per tonne, Trading Economics data shows.

But it seems the Goldman Sachs Group may have had the most impact. The broker has predicted key battery metals, including nickel, cobalt, and lithium, could drop over the next two years, Bloomberg reported.

Analysts Nick Snowdon and Aditi Rai predicted nickel will rise 20% this year before being driven down by “fundamental pressures”.

Nickel is a crucial component in electric vehicle batteries. 

The analysts also expressed overall concern the battery metals bull market is over. They said:

Investors are fully aware that battery metals will play a crucial role in the 21st century global economy.

Yet despite this exponential demand profile, we see the battery metals bull market as over for now.

Nickel Mines held its annual general meeting yesterday. In a presentation titled “Building a Nickel Empire”, the company highlighted it plans to become among the top 10 nickel producers in the world.

Share price recap

While these four ASX nickel shares may be down today, overall they have surged over the past year.

Mincor shares have exploded 133% in the past 12 months while Panoramic shares have soared 67%. The Nickel Mines share price has jumped 21% and IGO shares are 44% higher.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has returned around 1% in the past year.

The post Why are ASX nickel shares tumbling today? appeared first on The Motley Fool Australia.

More reading

• IGO share price crumbles amid battery material price warning
• Why are ASX lithium shares tanking on Wednesday?
• Why ASX lithium shares have ‘absolutely more room to run’ in 2022: expert
• Brokers name 3 ASX 200 lithium shares primed to take off
• Why the IGO share price is rallying on Monday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last month, the Westpac Banking Corp (ASX: WBC) share price had a few ups and downs but ultimately ended the period right back where it started it at $23.87.

This was actually a decent result for investors, especially given that the bank’s shares traded ex-dividend last month.

Furthermore, the ASX 200 index shed 3% of its value in May amid broad market weakness.

Why did the Westpac share price outperform the market?

The Westpac share price held up better than most last month thanks to the release of the banking giant’s half-year results.

In case you missed it, Australia’s oldest bank reported a 12% reduction in cash earnings to $3,095 million and a 61 cents per share interim dividend.

While this may not look too flash on paper, it was well ahead of expectations. For example, the Visible Alpha consensus estimate was for first-half cash earnings of $2.8 billion and an interim dividend of 59 cents per share.

But perhaps the biggest boost for the Westpac share price was news that management has reiterated its bold cost cutting target.

With rivals Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) both abandoning their cost reduction targets a week earlier, many thought Westpac would be forced to follow suit. Particularly given how the market was already very sceptical over its plans.

But lo and behold, Westpac reiterated its target of reducing its cost base down to $8 billion by FY 2024. This compares to operating costs of $13.3 billion in FY 2021, which include $2.3 billion of notable items.

And there’s reason to believe it could achieve this target. During the half, the bank reported a 10% or $624 million reduction in operating expenses to $5,373 million.

Where next for its shares?

While opinion is divided on the Westpac share price, one leading broker sees a lot of value in it.

A note out of Citi earlier this week reveals that its analysts have a buy rating and $29.00 price target on the bank’s shares. This implies potential upside of over 20% for investors.

The post Why did the Westpac share price beat the ASX 200 in May? appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• The ANZ share price is ‘trading at its largest discount to its peers in 15 years’: Is this justified?
• Where next for the Westpac share price?
• 5 things to watch on the ASX 200 on Friday
• What’s the outlook for ASX 200 dividend shares in the second half of 2022?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares of telco giant Telstra Corporation Ltd (ASX: TLS) finished the month of May 4% down at $3.88 apiece.

The telecommunications and broadband provider lagged the S&P/ASX 200 Index (ASX: XJO)’s 3% loss as well, falling from a high of $3.99 early in the month.

Meanwhile, in broader market moves, the S&P/ASX 200 Communication Services Index (ASX: XTJ) finished more than 6% down in May and is 13% down this year to date.

What’s up with the Telstra share price?

Whilst it was a fairly quiet affair out of Telstra’s camp last month, it appears market sentiment has begun to shift for the company.

With prices trading down in May, investors sold off Telstra shares at pace with the stock making a continuous series of lower highs and lower lows in that time.

The moves were matched by those of the communication services index (XTJ) which fumbled from a high of 1,512 points to start the month and made no signs of recovery.

In addition, analysts at Macquarie released a note highlighting that smaller telco providers are stealing market share from larger providers like Telstra.

Macquarie analysts said that collectively the largest 3 providers lost around 0.3% of market share last quarter, citing data from the Australian consumer watchdog. However, it does have a suspended rating on Telstra.

Separately, Jefferies analyst Roger Samuel also believes that Telstra might raise its mobile prices this year to keep up with the pace of inflation.

He rates Telstra a buy with a $4.47 per share price target in line with several other brokers who price Telstra shares on a similar valuation.

Meanwhile, around 57% of brokers covering Telstra still reckon it’s a buy right now, whereas around 36% say it’s currently a hold, according to Bloomberg data. Just one firm – Barclay Pearce – says it’s a sell on a $3.52 per share price target.

The consensus price target from this list is $4.52 per share, suggesting around a 16.5% potential upside should this view be correct.

The Telstra share price has clipped an 11.5% gain in the last 12 months of trade despite struggling to find range this year to date, shown below.

The post Why did the Telstra share price backtrack in May? appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX 200 dividend shares to buy now
• These 3 shares are topping the ASX 200 volume charts on Wednesday
• Is Telstra an ASX 200 share worth owning right now?
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• Analysts rate these ASX 200 dividend shares as buys

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Brokers have named a number of ASX shares as opportunities in June 2022. Businesses that are growing revenue at a relatively fast pace could turn into much bigger businesses over time.

These are businesses that are thought of as longer-term opportunities because of their current valuations and their prospects of growth.

Brokers try to calculate where a company’s share price is going to be in 12 months after their analyses of the business. That’s called a price target. Price targets aren’t guarantees, but just a guess and acknowledgement of how much potential growth the broker sees for the business. The bigger the price target, the more possible gains the broker thinks there is.

Let’s look at two of the ASX share opportunities.

Mach7 Technologies Ltd (ASX: M7T)

Mach7 is a business that provides medical imaging systems that develops “innovative image management and viewing solutions for healthcare organisations”.

It has more than 150 customers across 15 countries including integrated delivery networks, national health systems, medical research facilities, large academic medical institutions, regional community hospitals, private radiology practices, and independent provider groups.

Morgans currently rates it as a buy with a price target of $1.55. That implies a potential rise of more than 150% over the next year.

The broker took into account the ASX share’s recent FY22 third quarter.

In that update, the business said it achieved net positive operating cashflows for the quarter of $0.5 million. It also generated record financial year to date earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.2 million, up $4.7 million or 306% on last year. Third-quarter sales orders rose $4.4 million to $26.5 million. It’s also on track to deliver sales orders of $30 million for FY22.

The company also pointed to two new channel partnerships – AdvaHealth and Althea. On Althea, Mach7 said that it has a presence in 17 countries and will initially be working in Italy and the UK. There is also potential for further expansion in the EU.

BWX Limited (ASX: BWX)

BWX is a natural beauty business that has a number of brands including Sukin, Andalou Naturals, Mineral Fusion, and Go-To Skincare. The ASX share also sells products through the e-commerce sites Flora & Fauna and Nourished Life. It’s looking to expand the brands to more countries.

The broker UBS currently rates BWX as a buy with a price target of $2.55. That implies a possible rise in the BWX share price of more than 80% over the next year.

BWX recently gave a market presentation that looked at various elements of the business.

The company has done a business-wide review of financial and operating performance, as well as ongoing initiatives to support a sustainable cost base. It has identified $5 million in extra costs it can cut to streamline its operating model. In particular, it’s looking to improve its marketing return on investment (ROI) and achieve trade spend efficiency improvements.

As well, BWX is looking to grow its profit margins through various initiatives including price increases, increased manufacturing capacity, and improved operational efficiency.

The company is expecting to grow its revenue by between 20% to 25% in FY22 while the mid-point of the underlying EBITDA guidance could mean growth of around 3%.

Using UBS’ estimates on the ASX share, the BWX share price is valued at 17 times FY22’s estimated earnings and 11 times FY23’s estimated earnings.

The post Brokers rate these 2 top ASX shares as buys in June 2022 appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• Here’s why the BWX share price is crashing 22% to a multi-year low today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MACH7 FPO. The Motley Fool Australia has recommended BWX Limited and MACH7 FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares of Close The Loop Inc (ASX: CLG) are surging 24% into the green on Wednesday, now trading at 46 cents.

Investors might be bidding up the Close The Loop share price amid a company announcement upgrading its FY22 forecasts.

In broad market moves, the S&P/ASX 200 Index (ASX: XJO) has climbed 9 basis points into the green in today’s session.

Close The Loop boosts guidance

The company reports that it has realised strong organic revenue growth across all divisions, notably in the United States and Europe.

According to the release, “earnings [are] significantly ahead of plan” in each of these divisions, alongside strengths in its O F Pack, O F Flexo and Foster International segments.

As such, Close The Loop has upgraded its FY22 revenue and EBITDA prospectus forecasts by 11% and 10.5%, respectively.

It now forecasts $82 million and $13.6 million in FY22 revenue and EBITDA, respectively. That’s up from $74 million and $12.3 million in previous estimates.

Not only that, but the company’s current annual revenue run rate now exceeds $100 million including recent acquisitions, it says.

Separately, the company notes it has signed an MOU to produce its Resin8 structural and concrete product range in Australia. The decision comes after its launch “in other parts of the world”.

Speaking on the release, Close The Loop CEO Joe Foster said:

In our first six months as a listed entity Close The Loop Group has enjoyed considerable organic revenue growth across all divisions and we are increasing our FY22 revenue and EBITDA prospectus forecasts by 11% and 10.5% respectively.

This is due to our ability to successfully integrate complementary businesses that strengthen our capability as the only ASX-listed company operating in all parts of the circular economy. From product design, manufacturing, collection and recycling and then eventually recovering it as new packaging or secondary products, or simply packaging to packaging. When you take our acquisitions of Crasti & Co and Oceanic Agencies into account, we now have annualised revenue of around $100 million.

What’s next for Close The Loop?

The company is now looking to venture into the South African market via its sustainable packaging business. It is currently examining three possible “complementary acquisitions”.

Foster added:

While FY22 is shaping up to be a great year for the company, Close The Loop Group is also ensuring that upgrading its ability to scale as demand for recycled products generated through the circular economy increases. These initiatives include production capacity increases, efficiency improvements, new product ranges as well as examining strategic acquisition opportunities.

Close The Loop Group will host its inaugural investor day tomorrow (2 June) at its facilities in Somerton, Victoria.

The Close The Loop share price has gained 50% after listing in December 2021. It is now up more than 40% for the past month of trade.

The post Close The Loop share price rockets 24% on guidance boost appeared first on The Motley Fool Australia.

More reading

• AGL share price unscathed by scrapped demerger. What’s going on?
• IGO share price crumbles amid battery material price warning
• 2 ASX All Ordinaries shares rocking new multi-year highs on Wednesday
• Can the Altium share price cash in on the global chip shortage?
• Why did the NAB share price go backwards in May?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AGL Energy Ltd (ASX: AGL) share price has dipped into the red during afternoon trade.

AGL shares are currently down 0.8% to $8.69, having posted gains of 0.8% in early morning trade.

Still, that puts the AGL share price right about where it was before news broke that the company’s demerger was off the table.

That came after the AGL Board conceded they were unlikely to get the necessary shareholder approval to move ahead with the demerger.

Saying they still saw the plan to split the company into the separate coal power-focused Accel Energy alongside energy retailer AGL Australia as “the best way forward,” the CEO, chair, and two directors tendered their resignations.

Yet despite the loss of key leaders and spending some $160 million on the demerger plans, the AGL share price has come out unscathed.

What’s going on?

For some insight into that answer, we turn to Brian Gould, head of trading at Capital.com Australia.

Optimism and pessimism in balance

According to Gould:

There are traders on both sides of this stock who are focused on different outcomes. Buyers who entered the stock on the back of Mike Cannon-Brookes’ purchase of an 11.28% block see the scrapped demerger and the loss of its CEO, Chairman and others as a good thing, while longer-term investors are concerned that the company is now rudderless.

The share price action tells us that the optimism and pessimism present in the market around AGL are pretty well matched.

Not only is AGL trading right about level with where it was before the demerger was scrapped, it’s also trading some 22% higher than before news of a potential takeover first broke in February.

And, looking ahead, traders appear to believe the AGL share price could have further to run.

“For the time being, traders on our platform are predominantly long AGL CFDs [contract for difference], because the risks seem to be to the upside and that’s scaring short-sellers away,” Gould said.

AGL share price snapshot

The AGL share price has had a strong run in 2022, up 42%. That compares to a year-to-date loss of 5% posted by the S&P/ASX 200 Index (ASX: XJO).

The post AGL share price unscathed by scrapped demerger. What’s going on? appeared first on The Motley Fool Australia.

More reading

• Why the decision to keep AGL as one makes sense: expert
• AGL demerger news ‘huge day for Australia’: Mike Cannon-Brookes
• ASX 200 midday update: AGL demerger scrapped, A2 Milk jumps
• AGL share price deflates 4% in light of new future
• AGL share price on watch as demerger scrapped

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The IGO Ltd (ASX: IGO) share price is having a terrible start to the month.

In afternoon trade, the battery materials miner’s shares are down 13% to $11.00.

Why is the IGO share price crumbling?

Investors have been selling down the IGO share price on Wednesday following a warning from Goldman Sachs regarding battery material prices.

According to the note, its analysts believe that prices have peaked and will fall heavily over the coming years. Though, this isn’t necessarily a new view, with Goldman warning at the start of last month that lithium prices would fall materially in the near future.

However, on this occasion, the broker has taken aim at a range of battery materials.

According to Marketwatch, Goldman is forecasting the following (in USD):

[…] lithium falling from $53,982 a metric ton in 2022 to $16,372 a ton in 2023, cobalt $78,500 a ton in 2022 to $59,500 a ton in 2023. Nickel is likely to be firmer, at $31,000 a ton in 2022 to $30,250 a ton in 2023.

This is based on its assumption that between 2022 and 2025, there will be a 33% increase in lithium supply, a 14% increase in cobalt, and an 8% lift in nickel. Whereas the broker is forecasting annual demand growth rates of 27%, 11% and 7%, respectively.

As IGO has exposure to a range of battery materials, investors appear to believe that this could mean it falls short of consensus estimates.

Though, it is worth remembering that forecasting commodity prices is notoriously difficult. So, prices could behave very differently to these estimates. Time will tell if that is the case.

The post IGO share price crumbles amid battery material price warning appeared first on The Motley Fool Australia.

More reading

• Why are ASX lithium shares tanking on Wednesday?
• Why ASX lithium shares have ‘absolutely more room to run’ in 2022: expert
• Brokers name 3 ASX 200 lithium shares primed to take off
• Why the IGO share price is rallying on Monday
• Why BHP, Chalice Mining, IGO, and Life360 shares are storming higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The All Ordinaries Index (ASX: XAO) is wobbling on Wednesday but some of its constituents are having a far better day as their shares trade at long-forgotten highs.

At the time of writing, the index is down 0.23%, weighed down by many of its lithium-focussed members.

So what’s driving these stocks higher amid the index’s struggles? Let’s take a look.

2 ASX All Ordinaries shares hitting long-forgotten highs

Atlas Arteria Group (ASX: ALX)

ASX All Ordinaries share and European toll road operator Atlas Arteria is having a good day on the market on Wednesday.

Its share price reached an intraday high of $7.33, 1.9% higher than its previous close and the highest it’s been since early 2020. There’s been no news from the company to explain today’s gains.

However, last week it announced APRR – a French toll road group of which Atlas Arteria owns a 31% stake – had priced around $745 million of bonds.

Atlas Arteria CEO Graeme Bevans commented on the news, saying:

The transaction provides APRR with additional liquidity, extends its weighted average debt maturity, and strengthens APRR’s capacity for future growth.

Western Areas Ltd (ASX: WSA)

Fellow ASX All Ordinaries share Western Areas is also recording a new multi-year high today. It hit an intraday high of $3.87 today, representing a 0.5% gain and its highest point since 2015.

It comes as the company’s shareholders go to a vote on IGO Ltd (ASX: IGO)’s $3.87 per share takeover offer.

The proposed acquisition was dealt a blow in April. An independent expert found the then $3.36 per share offer unvalued Western Areas.

After the company’s bid was increased, an independent expert found the higher offer is not fair but is reasonable and is, therefore, in the best interest of Western Areas shareholders in the absence of a better deal.

A scheme meeting in which Western Areas investors will have their say on IGO’s potential acquisition kicked off at midday AEST (10am AWST).

The post 2 ASX All Ordinaries shares rocking new multi-year highs on Wednesday appeared first on The Motley Fool Australia.

More reading

• Why the IGO share price is rallying on Monday
• Expert reveals the dividend ASX share he just bought (and one he dropped)

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Altium Limited (ASX: ALU) share price is holding steady on Wednesday despite a broker claiming the electronic printed circuit board (PCB) software business could benefit from a global shortage of chips.

The broker Morgan Stanley believes the market may not be correctly judging how Altium is benefiting from the supply chain problems with chips, according to reporting in The Australian.

It was noted that other stakeholders in the tech supply chain, such as semiconductor businesses and tech hardware businesses are suffering from the chip shortage.

Why could the Altium share price benefit?

Morgan Stanley did some checking to confirm there is still good demand for Altium’s services. Altium’s software is reportedly being used to help work through the supply tightness.

Morgan Stanley’s Andrew McLeod said that a key takeaway from the broker’s San Francisco TMT (technology, media and telecom) conference was that “ongoing sporadic semis shortages continue to cause disruption, with most companies seeing the supply/demand imbalance to now persist into 2023″.

The broker pointed out the market seems to think Altium could suffer from supply chain problems. But, on the contrary, Morgan Stanley points out some positives.

It said Altium is actually experiencing more demand with PCB designers attracting additional workflow as they are tasked with re-purposing chips for different functions.

The broker also noted that Altium’s Octopart division – an electrical parts search engine – continues to see “strong demand” as designers look for parts in the shortage.

The final point that Morgan Stanley noted as a positive was the rapid uptake of Altium 365, which is the company’s cloud platform. It’s seeing strong demand.

On Altium 365, McLeod said (as reported by The Australian):

We keenly await detail on the monetisation strategy of 365, but as the leading cloud product, the strength of first-half results seems likely to continue.

Is the ASX tech share an opportunity?

Morgan Stanley certainly seems to think so. The broker has an ‘overweight’ rating on the ASX tech share, inferring it thinks the Altium share price is a buy.

The broker’s price target on Altium is $35. That implies a possible upside of around 20% over the next year.

Using Morgan Stanley’s earnings projections for Altium, it’s suggested Altium shares are valued at 55 times FY22’s estimated earnings. The broker then expects profit growth in FY23 for Altium. The Altium share price is valued at 44 times FY23’s estimated earnings.

The broker is also expecting Altium to grow its dividend in FY23, implying that the Altium dividend yield could be 1.8% in the next financial year.

Altium share price snapshot

Altium shares are currently down by less than 1% at $28.53 apiece in afternoon trade.

The company has a market capitalisation of around $2.2 billion.

The post Can the Altium share price cash in on the global chip shortage? appeared first on The Motley Fool Australia.

More reading

• Analysts say these ASX tech shares have over 40% upside
• Why I think these 3 ASX shares are top-quality buying at today’s prices
• 3 reasons to own Altium shares for the long term
• You won’t find more profitable ASX tech shares than these companies right now
• Who wants to be a millionaire? If only you’d invested $10,000 in these ASX shares 10 years ago

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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